2019 (4) TMI 1548 - HC - VAT and Sales Tax

Remand of the case - verification of transfer of non-taxable goods in picture varnish coating - HELD THAT - No question of law arises in the present case as by the impugned order under revision dated 04.08.2003, only a remand of the case to the Assessing Authority, which was made by the first appellate authority viz., the Appellate Assistant Commissioner has been upheld by the Tribunal. The question of penalty deleted by the Tribunal under Section 12 (3)(b) of the Act will naturally be decided again as matter of consequence. Appeal dismissed.

Summary

Issues:
1. Transfer of non-taxable goods in picture varnish coating.
2. Restoration of penalty deleted by the Appellate Assistant Commissioner.

Transfer of non-taxable goods in picture varnish coating:
The High Court considered a tax revision filed by the Revenue against the order of the Tamil Nadu Sales Tax Appellate Tribunal. The Tribunal had upheld the decision of the Appellate Assistant Commissioner, who remanded the case back to the Assessing Authority for further verification. The issue revolved around the turnover of ?29,35,253 concerning the transfer of non-taxable goods in picture varnish coating. The High Court referred to precedents, including a decision by the Bombay High Court, to establish that varnish is a consumable and does not involve the transfer of property. The Court affirmed the Tribunal's decision, stating that no property passes in consumables like ink during the execution of a works contract, emphasizing that only the value of goods transferred to the customer is taxable, not the goods used or consumed during the contract.

Restoration of penalty deleted by the Appellate Assistant Commissioner:
The second issue addressed by the High Court was the restoration of a penalty of ?7,38,700 under Section 12(3)(b) of the Act, 1959. The Appellate Assistant Commissioner had deleted the penalty, arguing that the turnover considered for tax levy was already available in the books of accounts and included in the taxable turnover. The Court examined relevant legal precedents, including decisions by the Supreme Court and the Madras High Court, to determine that the assessment should fall under Section 12(1) of the Act, not Section 12(3)(b), thus ruling out the imposition of the penalty. Consequently, the Court dismissed the Revenue's plea to reinstate the penalty and upheld the decision of the Appellate Assistant Commissioner in deleting the penalty.

In conclusion, the High Court dismissed the appeal filed by the State, stating that no question of law arose in the case. The Court affirmed the Tribunal's decision to remand the case to the Assessing Authority and allowed the Assessing Officer to proceed with fresh proceedings without interference. The judgment did not award any costs to either party.